Schools for the rich, schools for the poor?

A Steinbeis Study investigates whether school fees limit school choice in Germany

A school education does not come for free. This applies to all schools, of course, but is felt particularly by schools which are not state-funded. Unlike state schools, private schools are responsible for their own funding and cannot rely on money provided by the state. A team of experts at the Steinbeis Transfer Center for Economic and Social Management in Heidenheim have completed an in-depth study on school fees and their implications.

As long as private schools only have limited access to public funding, parental contributions – in the form of school fees – will remain crucial to the financial structures of these schools, alongside funding from the school board. But for schools, asking parents for financial support is far from ideal – in fact, it is little more than an emergency solution. For private schools, finding a way to cover their costs is a matter of sheer economic necessity. This difficult situation not only introduces a number of social issues, it also brings the fundamental role of the state into question. The constitutional ban on segregating students based on their family’s financial situation severely limits the amount of school fees which private schools can demand. The German constitution clearly states that any situation which leads to students being segregated based on their family’s financial situation “must not be encouraged”.

Education is unlike other publicly funded services in one central aspect: namely, schools which provide pupils with a general education must be founded and organized primarily, if not entirely, by the state. This situation is often overlooked – and has in fact been expressly forbidden by the Federal Constitutional Court. This state of affairs is historically rooted in an absolutist understanding of the state which does not reflect current social realities, and is in fact far older than the Federal Republic of Germany itself.

By way of contrast, the German constitution limits the role of the state to a mere supervisory function over the school system as a whole, and expressly grants the right to found private schools. The state constitution of Baden-Württemberg contains a similar clause, and also grants schools the right to claim public funding to cover their costs.

In legal terms, this still does not definitively answer the question of whether privateschools have the right to claim public funding to cover their running costs. This is because the existing adjudication stipulates that the current situation of partial funding is legally acceptable as long as it does not jeopardize the existence of the private school system as a whole. This ignores the substantial body of evidence that financial pressures have a significant effect on pupils’ school careers. For example, this was observed on a wide scale in the German school system 50 years ago, when secondary school fees were successively reduced and abolished in each federal state. This resulted in a significant rise in the proportion of pupils entering secondary school (an increase which was even larger for boys than for girls).

It remains unclear where lines should be drawn in individual cases. The constitutional ban on financial segregation, which governs the amount of school fees considered legally acceptable, has been substantiated by a ruling by the Federal Constitutional Court. This ruling stipulates that school fees of up to 101.99 euros are an acceptable financial burden for households – as adjusted for the level of inflation in 2005, the year of the ruling. In another recent decision, the VGH Baden-Württemberg has ruled that school fees of up to 120 euros are not in violation of the constitutional ban on financial segregation, once other factors are considered – for instance, that school fees are taxdeductible as they constitute an incidental expenditure.

The study conducted by the Steinbeis Transfer Center for Economic and Social Management aimed to establish a basis for making a rational decision on the levying of school fees. This information is needed to make a definitive statement on whether or not school fees violate the constitutional ban on financial segregation. Answering this question conclusively is the responsibility of the judiciary and legislators. As such, the study presented a variety of models and discussed their implications in detail without recommending any particular decision.

The Steinbeis team began the study by analyzing existing data, including income statistics and data from the German microcensus, socioeconomic panel and sample survey of income and expenditure. The study authors extracted data pertaining to the types of household under investigation, and entered it into a series of models used to measure absolute and relative poverty. The team also used various models to calculate the amount of school fees which would constitute an acceptable financial burden. This was achieved by conducting a threestage scenario analysis based on regional, legal and bank-related considerations. The study examined the different amounts of school fees considered acceptable and their implications for the remaining available net income per household.

In scenario I, the expenditure necessary for survival as defined by § 27 of the German Code of Social Law (SGB) was subtracted from the net household income to see what proportion of households would be able to afford school fees.

In scenario II, other unavoidable living costs were also subtracted from the net household income, as well as additional expenses such as insurance policies.In addition to the expenses subtracted in scenarios I and II, scenario III accounted for the fact that in future, the state pension scheme (financed by social security contributions) will no longer be sufficient to ensure an acceptable quality of life after retirement. This is a consequence of demographic change. In this scenario, additional retirement provisions were therefore subtracted from the net household income based on actuarial calculations.

After evaluating the data using these three scenarios, the Steinbeis team concluded that children in single-parent families and families in the lowest income brackets are extremely limited in their choice of school due to financial reasons. In practice, when schools levy a fee of 120 euros, well over half of all households are unable to exercise their right to choose which school theywant their children to attend. For instance, 77.82 per cent of single-parent households and 50.31 per cent of two-parent, twochild households are unable to finance the maximum legally acceptable school fee of 120 euros as defined by the VGH Baden- Württemberg. However, defining an acceptable limit for school fees at federal or national level which does not violate the constitutional ban on financial segregation is impossible for a number of reasons – such as regional variation in income and expenditure structures.

The Steinbeis study concluded that in practice, levying school fees means families with low to average incomes can no longer freely choose their children’s school. At the same time, the current financing situation has forced private schools into a constitutional grey area merely to ensure their survival. In light of this predicament, simply questioning the acceptable level of school fees is not enough – to do so would mean ignoring the bigger picture.

This issue is one of major importance for the nation as a whole, particularly in light of the conclusions reached by this comprehensive, methodologically complex study. As such, the debate regarding school fees should not be reduced in the mid-term to a mere matter of “hammering out” a legally acceptable limit to school fees, or agreeing on a (legally and politically) acceptable proportion of the population subject to de facto financial segregation. Instead, it would be expedient to consider alternative financing models.